Robert Tadmur exports processed turkey and has an upward sloping supply curve.The supply curve indicates that Robert faces a marginal cost of $0.25 or less per pound for supplying the first few pounds.But every producer in this market sells turkey at the market clearing price of $0.50 per pound.The difference between the actual amount that Robert receives and what he would accept to supply the market clearing quantity is called

Question

Quizplus · Accepted Answer

The difference between the actual amount that Robert receives and what he would accept to supply the market clearing quantity is called producer surplus. This is because Robert is willing to supply at a lower cost than the market price, and the difference between his actual earnings and what he would accept is a measure of his surplus as a producer. Consumer surplus is the benefit that consumers receive from purchasing a good at a price lower than what they are willing to pay, while importer surplus and trade deficit are not relevant in this scenario. Average variable cost is the cost per unit of output, but it is not relevant for calculating producer surplus.

Robert Tadmur Exports Processed Turkey and Has an Upward Sloping